A Bank of Canada action that increases nominal interest rates is called
A) expansionary monetary policy.
B) contractionary monetary policy.
C) a policy reaction function.
D) a monetary easing.
E) recessionary monetary policy.

Question

Quizplus · Accepted Answer

Increasing nominal interest rates is a contractionary monetary policy because it reduces the money supply, making borrowing more expensive and dampening economic activity.

A Bank of Canada Action That Increases Nominal Interest Rates